It’s a festive mood across the markets today. The Nifty is cruising well past the 25,500 mark, up over 1% and the Sensex too has clocked over 800 points gain. The banks have seen a sharp rally intra-day trade. Kotak Mahindra Bank, Axis Bank, Nestle are among the top gainers in trade today. The small and midcaps too see brisk buying ahead of the Diwali week.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments pointed out that “the latest comments from the US administration indicate a reduction in the India-US trade tensions and point to the possibility of a US-India trade deal in the next few weeks. The US-India trade deal will be a big boost to the markets. The low CPI inflation of 1.54% in September and the possibility of FY26 annual inflation declining to 2.6% open up the possibility of further rate cuts by the MPC. This, in turn, will boost the prospects of rate sensitives, particularly automobiles, which are likely to experience sustained high demand for an extended period of time.”
A look at 3 reasons why the markets are surging in afternoon trade –
Here are the top triggers dictating market move in afternoon trade
Possibility of India-US trade deal
Recent development indicate that the tension between Indian and US officials may have reduced to some extent and raise hopes of officials on both managing to strike a trade deal in the next few weeks. Moreover, China’s tough actions regarding the rare earth magnets have hit the US hard. Industry observers believe that the US could be keen on striking a deal with both India and China and do not rule out the possibility of some concessions. However, there is no official statement in this regard.
Rupee sees a strong rebound
The rupee has seen a sharp 1.2% rebound. This is the sharpest rupee Vs US dollar gain in 4 months after the RBI’s $5 billion market move. The latest report on Reuters indicated that the RBI may have sold $3-5 billion in spot and non-deliverable forward markets. This has been the largest intervention by the central bank in months. However, the Reuters report added that the exact scale of the RBI’s intervention is difficult to determine since it operates through multiple state-run banks.
Q2 earnings outlook
The Q2FY26 earnings season was marked with interesting events. These include US policy uncertainties, currency depreciation, slower uptick in exports, GST 2.0 and a normal and well-distributed monsoon. Axis Securities believes that , “all these developments suggest that the Q2FY26 earnings season is likely to exhibit a mixed trend, broadly in line with previous quarters that witnessed a relatively soft performance.” The brokerage house calls the current quarter a transition quarter before growth picks up. They added that, “Most of the significant developments are expected in the second half of the current financial year, leading to a potential improvement in economic momentum. Overall, the improvement in earnings is expected in certain pockets like Telecom, Industrials, Materials, Utilities, and Consumer Discretionary.”